Business · Companies · 3 hrs ago
Saudi startups turn to debt as equity funding slows
Saudi startups are increasingly borrowing money as a way to raise funds while equity investment slows.
The shift comes as investors grow cautious amid regional conflict and uncertainty over the war between the United States and Iran.
India-based Stride Ventures has committed about $90 million to Saudi deals since entering the market roughly a year ago.
The firm aims to invest more than twice that amount during its first two years in Riyadh.
Saudi startups raised $1 billion in the first nine months of 2026, about a third less than in the same period a year earlier.
No new companies have been approved to list on Saudi Arabia’s main market since April, while international investors have also pulled back across the region.
Debt can help founders fund growth without giving up ownership, and some are using it alongside planned equity rounds.
Stride expects to complete at least two more deals before the end of the year.
Saudi startups are increasingly using debt financing as equity fundraising slows amid regional conflict and investor caution.
Stride Ventures has committed about $90 million to Saudi deals since entering the market around a year ago.
Saudi startup investment fell by about one-third to $1 billion in the first nine months of 2026, according to Magnitt.
Founders are using debt to finance expansion while delaying equity rounds and avoiding lower company valuations.
- Who
- Saudi startups are increasingly turning to debt financing, including through lenders such as Stride Ventures.
- What
- Startups are using debt as equity fundraising slows.
- When
- The trend gained momentum in 2026, after interest in debt financing began rising the previous year.
- Where
- Saudi Arabia.
- Why
- Investor caution and slower equity fundraising have led startups to seek other sources of capital and protect their ownership stakes.
This story does not have two clearly opposing sides.
Interest in debt financing for startups in Saudi Arabia began to rise steadily.
The US-Iran war began, adding to uncertainty cited by investors.
Saudi startups raised $1 billion in investment funding, about one-third less than in the same period a year earlier.
- Stride Ventures commitment
- About $90 million for Saudi deals since entering the market around a year ago
- Saudi startup funding
- $1 billion in the first nine months of 2026
- Year-on-year change
- Funding in Saudi Arabia fell by about one-third
- UAE startup funding
- More than $1.6 billion in the first nine months of 2026, up about 20%
What people are saying
As equity investors become more selective, and founders are keen to protect their ownership stakes, we are seeing companies raise debt alongside their next equity rounds, rather than keeping it as a fallback option to use when needed.
Venture debt has decisively moved from the sidelines to the core of venture capital financing tools.